ACIT 12(2)(1), MUMBAI V. M/s EHARA ENGINEERING PVT. LTD., MUMBAI

ITA 3296/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 5458 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2020
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 16-05-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AMIT PRATAP SINGH
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E' BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI N.K. PRADHAN , ACCOUNTANT MEMBER ITA NO. 3 296 & 3297 /MUM. /2019 ( ASSESSMENT YEAR : 20 1 0 1 1 & 2009 10 ) ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 12(2)(1), MUMBAI . APPELLANT V/S M/S. EHARA ENGINEERING PVT. LTD. GALA NO.3 & 7, SANT BHAWAN SHARMA INDUSTRIAL ESTATE WALBHAT ROAD, GOREGAON EAST MUMBAI 400 063 PAN AAACE2667E . RESPONDENT ASSESSEE BY : NONE REVENUE BY : SHRI AMIT PRATAP SINGH DATE OF HEARING 30.09.2020 DATE OF ORDER 07.10.2020 O R D E R PER SAKTIJIT DEY. J.M. A FORESAID APPEALS FILED BY THE REVENUE ARISE OUT OF TWO SEPARATE ORDERS OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 20, MUMBAI, FOR THE ASSESSMENT YEARS 2010 11 AND 2009 10. 2. THE REVENUE HAS FILED THESE APPEALS BEING AGGRIEVED WITH THE DECISION OF LEARNED COMMISSIONER (APPEALS) IN DELETING THE PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 19 61 (FOR SHORT THE ACT ). 2 M/S. EHARA ENGINEERING PVT. LTD. 2. WHEN THE SE APPEAL S W ERE CALLED FOR HEARING, NO ONE WAS PRESENT ON BEHALF OF THE RESPONDENT ASSESSEE TO REPRESENT THE CASE. THERE IS NO APPLICATION SEEKING ADJOURNMENT EITHER. CONSIDERING THE NATURE OF DISPUTE, WE PROCEED TO DISPOSE OFF THE APPEAL S EX PARTE QUA THE ASSESSEE AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE AND ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. 3. BRIEF FACTS WHICH ARE COMMON IN BOTH THE APPEALS ARE, UPON RECEIVING INFORMATION FROM THE SALES TAX D EPART MENT, GOVERNMENT OF MAHARASHTRA THAT CERTAIN PURCHASES CLAIMED TO HAVE BEEN MADE BY THE ASSESSEE DURING THE RELEVANT ASSESSMENT YEAR S ARE NON GENUINE AS THE CONCERNED SELLING DEALERS WERE IDENTIFIED AS HAWALA OPERATOR S BY THE SALES TAX DEPARTMENT, THE ASSESSING OFFICER RE OPENED THE ASSESSMENT FOR THE IMPUGNED ASSESSMENT YEARS. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO PROVE THE GENUINENESS OF SUCH PURCHASES. NOT BEING SATISFIED WITH THE EVIDENCES FURNISHED AN D SUBMISSIONS MADE BY THE ASSESSEE, THE ASSESSING OFFICER HELD THAT THE DISPUTED PURCHASES OF ` 14,96,886, FOR THE ASSESSMENT YEAR 2009 10 AND ` 34,76,696, FOR THE ASSESSMENT YEAR 2010 11 ARE NON GENUINE. HOWEVER, INSTEAD OF DISALLOWING ENTIRE PURCHASES, T HE ASSESSING OFFICER PROCEEDED TO ESTIMATE THE PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES AND DISALLOWED 12.5% OUT OF THE PURCHASES MADE IN THE RELEVANT 3 M/S. EHARA ENGINEERING PVT. LTD. ASSESSMENT YEAR S . ACCORDINGLY, HE ADDED BACK AN AMOUNT OF ` 1,87,110, IN ASSESSMENT YEAR 2009 10 AND AN AMOUNT OF ` 4,34,587, IN ASSESSMENT YEAR 2010 11. ON THE BASIS OF SUCH ADDITION S , THE ASSESSING OFFICER INITIATED PROCEEDINGS FOR IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT AND ULTIMATE LY PASSED ORDERS IMPOSING PENALTY UNDER SECTION 271(1)(C) OF THE ACT OF ` 63,600, IN ASSESSMENT YEAR 2009 10 AND AN AMOUNT OF ` 1,47, 716, IN ASSESSMENT YEAR 2010 11 ALLEGING FURNISHING OF INACCURATE PARTICULARS OF INCOME. AGAINST THE PENALTY ORDERS SO PASSED, THE ASSESSEE PREFERRED APPEAL S BEFORE THE FIRST APPEL LATE AUTHORITY. 4. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE IN THE CONTEXT OF FACTS AND MATERIAL ON RECORD, LEARNED COMMISSIONER (APPEALS) RELYING UPON THE DECISION OF THE HONBLE P&H HIGH COURT IN HARI GOPAL SINGH V/S CIT, 258 ITR 85 (P&H), DELETED THE PENALTY IMPOSED IN BOTH THE ASSESSMENT YEARS. 5. WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE MATERIAL ON RECORD. AS COULD BE SEEN FROM THE FACTS ON RECORD, ON THE BASIS OF SOME INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT, THE ASSESSING OFFICER TREATED CERTAIN PURCHASES MADE BY THE ASSESSEE DURING THE YEAR S UNDER CONSIDERATION TO BE NON GENUINE. HOWEVER, INSTEAD OF DISALLOWING THE ENTIRE PURCHASES THE ASSESSING OFFICER HAD ONLY ADDED THE PROFIT ELEMENT EMBEDDED I N SUCH 4 M/S. EHARA ENGINEERING PVT. LTD. PURCHASES. THE AFORESAID ACTION OF THE ASSESSING OFFICER CLEARLY SUGGESTS THAT THE ASSESSEE , IN FACT , HAD MADE PURCHASES , THOUGH , THE SOURCE OF SUCH PURCHASES MAY NOT HAVE BEEN ESTABLISHED FOR WHATEVER MAY BE THE REASON. THEREFORE, EVEN ASSUMING THA T THE ASSESSEE WAS UNABLE TO PROVE THE SOURCE OF SUCH PURCHASES, WHAT MIGHT HAVE ESCAPED ASSESSMENT IS ONLY THE PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES. FOR THAT REASON ONLY, THE ASSESSING OFFICER HAS ESTIMATED THE PROFIT ELEMENT EMBEDDED IN SUCH PURCHAS ES @ 12.5% AND ADDED BACK TO THE INCOME OF THE ASSESSEE . HOWEVER, THE ADDITION S OF SUCH ESTIMATED PROFIT BY NO MEANS WOULD LEAD TO AN INFERENCE THAT THE ASSESSEE HAS EITHER FURNISHED INACCURATE PARTICULARS OF INCOME OR CONCEALED ITS INCOME. THAT BEING THE CASE, THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT CANNOT BE PRESSED INTO ACTION. IN VIEW OF THE AFORESAID, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LEARNED COMMISSIONER (APPEALS) IN DELETING THE PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT IN BOTH THE ASSESSMENT YEARS UNDER CONSIDERATION. GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 6. IN THE RESULT, APPEALS ARE DISMISSED. ORDER PRONOUNCED THROUGH NOTICE BOARD UNDER RULE 34(4) OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, 1963, ON 07.10.2020 SD/ - N.K. PRADHAN ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 07.10.2020 5 M/S. EHARA ENGINEERING PVT. LTD. COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ASSISTANT REGISTRAR ITAT, MUMBAI